Filed Pursuant to Rule 424(b)(3)
Registration No. 333-152653
CB RICHARD ELLIS REALTY TRUST
Supplement No. 13 dated December 4, 2009
to the Prospectus dated April 29, 2009
This Supplement No. 13 supersedes and replaces the following prior supplements to our prospectus dated April 29, 2009: Supplement No. 9 dated August 21, 2009, Supplement No. 10 dated October 2, 2009, Supplement No. 11 dated October 22, 2009 and Supplement No. 12 dated November 17, 2009. Supplement No. 9 superseded and replaced all prior supplements to the registrants prospectus dated April 29, 2009. This Supplement No. 13 provides information that shall be deemed part of, and must be read in conjunction with, the prospectus and the additional information incorporated by reference herein and described under the heading “Incorporation by Reference” in this Supplement No. 13. Capitalized terms used in this Supplement No. 13 have the same meanings in the prospectus unless otherwise stated herein. The terms “we,” “our,” “us” and CBRE REIT include CB Richard Ellis Realty Trust and its subsidiaries.
| Supplement No. 13 Page No. | Prospectus Page No. | |||
| 1 | 1 | |||
| 2 | i | |||
| 2 | 98-99 | |||
| 3 | 99 | |||
| 3-14 | 65-81 | |||
| 14 | 82-85 | |||
| 14 | 86-90 | |||
| 15 | 46-47 | |||
| 16-19 | 48-52 | |||
| 20 | 10-14, 91-94 | |||
| 20 | 102-109 | |||
| 20-21 | 53-64 | |||
| 21 | 148-149 | |||
| 22 | 150 | |||
| F-1 | F-1-F-2 |
Status of Our Current Offering
Our registration statement on Form S-11 relating to this public offering was declared effective by the Securities and Exchange Commission, or the SEC, on January 30, 2009. From January 30, 2009 through September 30, 2009, we have accepted subscriptions from 7,562 investors and issued 26,213,844 common shares pursuant to this public offering, which includes 913,950 common shares issued pursuant to our dividend reinvestment plan, and received gross offering proceeds of approximately $261,681,461. As of September 30, 2009, approximately $2,738,318,539 in common shares were available to be offered and sold in this public offering. As of November 11, 2009, 97,362,210 common shares were issued and outstanding. Unless extended, this public offering will not last beyond January 30, 2011 (which is two years after the date of the original prospectus dated January 30, 2009). In certain states, we will be required to renew this registration statement or file a new registration statement to extend the offering beyond this date. If we continue our offering beyond two years from the date of our original prospectus, we will provide that information in a prospectus supplement. We reserve the right to terminate this offering at any time.
We previously disclosed that, as a condition for clearing our offering in Arkansas and Alabama, each of the Arkansas and Alabama securities commissions had required us to undertake to amend the investor suitability standards provision of our declaration of trust. The amendment would increase the suitability standards so that an investor is required to have either: a net worth of at least $250,000 (excluding the value of the investor’s home, furnishings and automobiles); or a gross annual income of at least $70,000 and a net worth of at least $70,000 (excluding the value of the investor’s home, furnishings and automobiles). On June 16, 2009, our shareholders approved the amendment at our 2009 annual meeting of shareholders. We filed the amendment with the Maryland State Department of Assessments and Taxation on June 19, 2009, at which time the amendment became effective.
Fees Paid in Connection with Our Offerings
For the nine months ended September 30, 2009 and the year ended December 31, 2008, our Dealer Manager earned the following fees:
| Nine Months Ended September 30, 2009 | Year Ended December 31, 2008 | |||||||||||
| Earned (1) | Payable (2) | Earned (1) | Payable (2) | |||||||||
Selling commissions | $ | 15,309,000 | $ | 286,000 | $ | 13,703,000 | $ | 426,000 | ||||
Dealer manager fees | $ | 5,427,000 | $ | 350,000 | $ | 4,929,000 | $ | 194,000 | ||||
Marketing support fees | $ | 2,265,000 | $ | 63,000 | $ | 2,074,000 | $ | 80,000 | ||||
| (1) | Earned represents the amount expensed on an accrual basis for services provided by the Dealer Manager during the period. |
| (2) | Payable represents the total unpaid amount due on an accrual basis to the Dealer Manager for services provided as of the balance sheet date specified. |
For the nine months ended September 30, 2009 and the year ended December 31, 2008, our Dealer Manager and our Investment Advisor and/or its affiliates earned the following other offering costs:
| Nine Months Ended September 30, 2009 | Year Ended December 31, 2008 | |||||||||||
| Earned (1) | Payable (2) | Earned (3) | Payable (4) | |||||||||
Other Offering Costs | $ | 1,264,000 | $ | 1,174,000 | $ | 4,115,000 | $ | 3,704,000 | ||||
| (1) | Included in the other offering costs earned is $1,151,000 and $113,000 for the Dealer Manager and the Investment Advisor, respectively. |
| (2) | Included in the payable amount is $1,162,000, $12,000 and $0 due to the Dealer Manager, the Investment Advisor and CB Richard Ellis Group, Inc., respectively, as of the balance sheet date specified. |
| (3) | Included in the other offering costs earned is $3,999,000 and $116,000 for the Dealer Manager and the Investment Advisor, respectively. |
| (4) | Included in the payable amount is $2,692,000, $13,000 and $999,000 due at year end to the Dealer Manager, the Investment Advisor and CB Richard Ellis Group, Inc., respectively, as of the balance sheet date specified. |
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Fees Paid in Connection with Our Operations
For the nine months ended September 30, 2009 and the year ended December 31, 2008, our Investment Advisor and/or its affiliates earned the following fees:
| Nine Months Ended September 30, 2009 | Year Ended December 31, 2008 | |||||||||||
| Earned(1) | Payable(2) | Earned(1) | Payable(2) | |||||||||
Acquisition fees(3) | $ | 2,804,000 | $ | — | $ | 5,670,000 | $ | 743,000 | ||||
Investment management fees(4) | $ | 5,584,000 | $ | 718,000 | $ | 3,964,000 | $ | 625,000 | ||||
Property management fees | $ | 459,000 | $ | 125,000 | $ | 491,000 | $ | 126,000 | ||||
| (1) | Earned represents the amount expensed on an accrual basis for services provided by the Investment Advisor during the period. |
| (2) | Payable represents the unpaid amount due on an accrual basis to the Investment Advisor for services provided. |
| (3) | In connection with services provided to the Investment Advisor, the Sub-Advisor, pursuant to a sub-advisory agreement, was paid $476,000 and $921,000 by the Investment Advisor for the nine months ended September 30, 2009 and the year ended December 31, 2008, respectively. |
| (4) | The Investment Advisor waived investment management fees of $1,026,000 and $1,529,000 for the nine months ended September 30, 2009 and the year ended December 31, 2008, respectively.In connection with services provided to the Investment Advisor, the Sub-Advisor, pursuant to a sub-advisory agreement, was paid $771,000 and $547,000 by the Investment Advisor for the nine months ended September 30, 2009 and the year ended December 31, 2008, respectively. |
CBRE Capital Markets, an affiliate of the Investment Advisor, received $0 in mortgage banking fees for the nine months ended September 30, 2009 and approximately $636,000 for the year ended December 31, 2008. Leasing and brokerage fees aggregating $67,000 and $15,000 were paid to the Investment Advisor or its affiliates for the nine months ended September 30, 2009 and the year ended December 31, 2008, respectively. In addition, CB Richard Ellis, UK, an affiliate of the Investment Advisor, received a payment for management services totaling $75,000 for the nine months ended September 30, 2009 and a payment for certain acquisition expenses in conjunction with the acquisition of Thames Valley Five totaling $42,000 for the year ended December 31, 2008.
This section contains certain information that supplements and updates the information under the section “Real Estate Investments,” which begins on page 65 of our prospectus.
Properties
As of September 30, 2009, we owned, on a consolidated basis, 57 office, retail, and industrial (primarily warehouse/distribution) properties located in ten states (California, Florida, Georgia, Illinois, Massachusetts, Minnesota, North Carolina, South Carolina, Texas and Virginia) and in the United Kingdom, encompassing approximately 7,805,000 rentable square feet, as well as one undeveloped land parcel in Georgia. Our properties previously held for sale have been transferred to continuing operations. Our consolidated properties were approximately 83.15% leased (based upon square feet) as of September 30, 2009. As of September 30, 2009, certain of our consolidated properties were subject to mortgage debt, a description of which is set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, which is incorporated herein by reference.
In addition, we have ownership interests in three unconsolidated entities that, as of September 30, 2009, owned interests in 21 properties. Excluding those properties owned through our investment in CBRE Strategic Partners Asia, we owned, on an unconsolidated basis, 11 industrial, office and retail properties located in seven states (Arizona, Florida, Indiana, North Carolina, Ohio, Tennessee and Texas) encompassing approximately 5,976,000 rentable square feet. Our unconsolidated properties were approximately 99.71% leased (based upon square feet) as of September 30, 2009. As of September 30, 2009, certain of our unconsolidated properties were subject to mortgage debt, a description of which is set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, which is incorporated herein by reference.
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The average effective annual rents for our industrial properties, office properties and retail properties were approximately $36,187,000, $30,437,000 and $8,480,000, as of September 30, 2009, respectively.
The following table provides information relating to our properties, excluding those owned through our investment in CBRE Strategic Partners Asia, as of September 30, 2009. These properties consisted of 48 industrial properties, encompassing 11,697,000 rentable square feet, 17 office properties, encompassing 1,588,000 rentable square feet and three retail properties, encompassing 496,000 rentable square feet.
Property and Market | Date Acquired | Year Built | Property Type | Our Effective Ownership | Net Rentable Square Feet (in thousands) | Percentage Leased | Approximate Total Acquisition Cost(1) (in thousands) | ||||||||||
Domestic Consolidated Properties: | |||||||||||||||||
REMEC Corporate Campus 1 | 9/15/2004 | 1983 | Office | 100.00 | % | 34 | 100.00 | % | $ | 6,833 | |||||||
REMEC Corporate Campus 2 | 9/15/2004 | 1983 | Office | 100.00 | % | 30 | 100.00 | % | 6,125 | ||||||||
REMEC Corporate Campus 3 | 9/15/2004 | 1983 | Office | 100.00 | % | 37 | 100.00 | % | 7,523 | ||||||||
REMEC Corporate Campus 4 | 9/15/2004 | 1983 | Office | 100.00 | % | 31 | 100.00 | % | 6,186 | ||||||||
300 Constitution Drive | 11/3/2004 | 1998 | Warehouse/Distribution | 100.00 | % | 330 | 100.00 | % | 19,805 | ||||||||
Deerfield Commons(2) | 6/21/2005 | 2000 | Office | 100.00 | % | 122 | 97.76 | % | 21,834 | ||||||||
505 Century(3) | 1/9/2006 | 1997 | Warehouse/Distribution | 100.00 | % | 100 | 72.40 | % | 6,095 | ||||||||
631 International(3) | 1/9/2006 | 1998 | Warehouse/Distribution | 100.00 | % | 73 | 100.00 | % | 5,407 | ||||||||
660 North Dorothy(3) | 1/9/2006 | 1997 | Warehouse/Distribution | 100.00 | % | 120 | 80.63 | % | 6,836 | ||||||||
Bolingbrook Point III | 8/29/2007 | 2006 | Warehouse/Distribution | 100.00 | % | 185 | 100.00 | % | 18,170 | ||||||||
Cherokee Corporate Park(3)(4) | 8/30/2007 | 2000 | Warehouse/Distribution | 100.00 | % | 60 | 100.00 | % | 3,775 | ||||||||
Community Cash Complex 1(3)(4)Spartanburg, SC | 8/30/2007 | 1960 | Warehouse/Distribution | 100.00 | % | 205 | 32.83 | % | 2,690 | ||||||||
Community Cash Complex 2(3)(4)Spartanburg, SC | 8/30/2007 | 1978 | Warehouse/Distribution | 100.00 | % | 145 | 35.07 | % | 2,225 | ||||||||
Community Cash Complex 3(3)(4)Spartanburg, SC | 8/30/2007 | 1981 | Warehouse/Distribution | 100.00 | % | 116 | 100.00 | % | 1,701 | ||||||||
Community Cash Complex 4(3)(4)Spartanburg, SC | 8/30/2007 | 1984 | Warehouse/Distribution | 100.00 | % | 33 | 0.00 | % | 547 | ||||||||
Community Cash Complex 5(3)(4)Spartanburg, SC | 8/30/2007 | 1984 | Warehouse/Distribution | 100.00 | % | 53 | 84.85 | % | 824 | ||||||||
Fairforest Building 1(3)(4) | 8/30/2007 | 2000 | Manufacturing | 100.00 | % | 51 | 100.00 | % | 2,974 | ||||||||
Fairforest Building 2(3)(4) | 8/30/2007 | 1999 | Manufacturing | 100.00 | % | 104 | 100.00 | % | 5,379 | ||||||||
Fairforest Building 3(3)(4) | 8/30/2007 | 2000 | Manufacturing | 100.00 | % | 100 | 100.00 | % | 5,760 | ||||||||
Fairforest Building 4(3)(4) | 8/30/2007 | 2001 | Manufacturing | 100.00 | % | 101 | 100.00 | % | 5,640 | ||||||||
Fairforest Building 5 | 8/30/2007 | 2006 | Warehouse/Distribution | 100.00 | % | 316 | 100.00 | % | 16,968 | ||||||||
Fairforest Building 6(5) | 8/30/2007 | 2005 | Manufacturing | 100.00 | % | 101 | 100.00 | % | 7,469 | ||||||||
Fairforest Building 7(3) | 8/30/2007 | 2006 | Warehouse/Distribution | 100.00 | % | 101 | 49.28 | % | 5,626 | ||||||||
Greenville/Spartanburg Industrial Park(3)(4)Spartanburg, SC | 8/30/2007 | 1990 | Manufacturing | 100.00 | % | 67 | 100.00 | % | 3,388 | ||||||||
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Property and Market | Date Acquired | Year Built | Property Type | Our Effective Ownership | Net Rentable Square Feet (in thousands) | Percentage Leased | Approximate Total Acquisition Cost(1) (in thousands) | |||||||||
Highway 290 Commerce Park Building 1(3)(4) | 8/30/2007 | 1995 | Warehouse/Distribution | 100.00 | % | 150 | 33.33 | % | 5,388 | |||||||
Highway 290 Commerce Park Building 5(3)(4)Spartanburg, SC | 8/30/2007 | 1993 | Warehouse/Distribution | 100.00 | % | 30 | 100.00 | % | 1,420 | |||||||
Highway 290 Commerce Park Building 7(3)(4)Spartanburg, SC | 8/30/2007 | 1994 | Warehouse/Distribution | 100.00 | % | 88 | 0.00 | % | 4,889 | |||||||
HJ Park Building 1 | 8/30/2007 | 2003 | Manufacturing | 100.00 | % | 70 | 100.00 | % | 4,216 | |||||||
Jedburg Commerce Park(3) | 8/30/2007 | 2007 | Manufacturing | 100.00 | % | 513 | 100.00 | % | 41,991 | |||||||
Kings Mountain I(5) | 8/30/2007 | 1998 | Warehouse/Distribution | 100.00 | % | 100 | 0.00 | % | 5,497 | |||||||
Kings Mountain II | 8/30/2007 | 2002 | Warehouse/Distribution | 100.00 | % | 302 | 100.00 | % | 11,311 | |||||||
Mount Holly Building | 8/30/2007 | 2003 | Warehouse/Distribution | 100.00 | % | 101 | 100.00 | % | 6,208 | |||||||
North Rhett I | 8/30/2007 | 1973 | Warehouse/Distribution | 100.00 | % | 285 | 100.00 | % | 10,302 | |||||||
North Rhett II | 8/30/2007 | 2001 | Warehouse/Distribution | 100.00 | % | 102 | 99.95 | % | 7,073 | |||||||
North Rhett III(5) | 8/30/2007 | 2002 | Warehouse/Distribution | 100.00 | % | 80 | 100.00 | % | 4,812 | |||||||
North Rhett IV | 8/30/2007 | 2005 | Warehouse/Distribution | 100.00 | % | 316 | 100.00 | % | 17,060 | |||||||
Orangeburg Park Building | 8/30/2007 | 2003 | Warehouse/Distribution | 100.00 | % | 101 | 100.00 | % | 5,474 | |||||||
Orchard Business Park 2(3)(4) | 8/30/2007 | 1993 | Warehouse/Distribution | 100.00 | % | 18 | 100.00 | % | 761 | |||||||
Union Cross Building I | 8/30/2007 | 2005 | Warehouse/Distribution | 100.00 | % | 101 | 100.00 | % | 6,585 | |||||||
Union Cross Building II | 8/30/2007 | 2005 | Warehouse/Distribution | 100.00 | % | 316 | 100.00 | % | 17,216 | |||||||
Highway 290 Commerce | 9/24/2007 | 1995 | Warehouse/Distribution | 100.00 | % | 100 | 100.00 | % | 4,626 | |||||||
Highway 290 Commerce | 11/1/2007 | 1996 | Warehouse/Distribution | 100.00 | % | 105 | 0.00 | % | 3,760 | |||||||
Orchard Business Park 1(3)(4)Spartanburg, SC | 11/1/2007 | 1994 | Warehouse/Distribution | 100.00 | % | 33 | 100.00 | % | 1,378 | |||||||
Lakeside Office Center | 3/5/2008 | 2006 | Office | 100.00 | % | 99 | 97.88 | % | 17,994 | |||||||
Kings Mountain III(3) | 3/14/2008 | 2007 | Warehouse/Distribution | 100.00 | % | 542 | 0.00 | % | 25,728 | |||||||
Enclave on the Lake | 7/1/2008 | 1999 | Office | 100.00 | % | 171 | 100.00 | % | 37,827 | |||||||
Avion Midrise III | 11/18/2008 | 2002 | Office | 100.00 | % | 71 | 100.00 | % | 21,111 | |||||||
Avion Midrise IV | 11/18/2008 | 2002 | Office | 100.00 | % | 72 | 100.00 | % | 21,112 | |||||||
13201 Wilfred Lane(6) | 6/29/2009 | 1999 | Warehouse/Distribution | 100.00 | % | 335 | 100.00 | % | 15,340 | |||||||
3011, 3055 & 3077 Comcast Place(3)(6)Oakland, CA | 7/1/2009 | 1988 | Office | 100.00 | % | 220 | 100.00 | % | 49,000 | |||||||
140 Depot Street(3) (6) | 7/31/2009 | 2009 | Warehouse/Distribution | 100.00 | % | 238 | 100.00 | % | 18,950 | |||||||
12650 Ingenuity Drive(6) | 8/5/2009 | 1999 | Office | 100.00 | % | 125 | 100.00 | % | 25,350 |
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Property and Market | Date Acquired | Year Built | Property Type | Our Effective Ownership | Net Rentable Square Feet (in thousands) | Percentage Leased | Approximate Total Acquisition Cost(1) (in thousands) | ||||||||||
Crest Ridge Corporate Center I(3)(6)Minneapolis, MN | 8/17/2009 | 2009 | Office | 100.00 | % | 116 | 100.00 | % | 28,419 | ||||||||
Total Domestic Consolidated Properties | 7,515 | 82.50 | % | 590,578 | |||||||||||||
International Consolidated Properties: | |||||||||||||||||
602 Central Blvd. | 4/27/2007 | 2001 | Office | 100.00 | % | 50 | 100.00 | % | 23,847 | ||||||||
Thames Valley Five | 3/20/2008 | 1998 | Office | 100.00 | % | 40 | 100.00 | % | 29,572 | ||||||||
Albion Mills Retail Park | 7/11/2008 | 2000 | Retail | 100.00 | % | 55 | 100.00 | % | 22,098 | ||||||||
Maskew Retail Park | 10/23/2008 | 2007 | Retail | 100.00 | % | 145 | 100.00 | % | 53,727 | ||||||||
Total International Consolidated Properties | 290 | 100.00 | % | 129,244 | |||||||||||||
Total Consolidated Properties | 7,805 | 83.15 | % | 719,822 | |||||||||||||
Unconsolidated Properties(7): | |||||||||||||||||
Buckeye Logistics Center(8) | 6/12/2008 | 2008 | Warehouse/Distribution | 80.00 | % | 605 | 100.00 | % | 35,573 | ||||||||
Afton Ridge Shopping Center(9)Charlotte, NC | 9/18/2008 | 2007 | Retail | 90.00 | % | 296 | 94.24 | % | 44,858 | ||||||||
AllPoints at Anson Bldg. 1(8)Indianapolis, IN | 9/30/2008 | 2008 | Warehouse/Distribution | 80.00 | % | 631 | 100.00 | % | 27,150 | ||||||||
12200 President’s Court(8) | 9/30/2008 | 2008 | Warehouse/Distribution | 80.00 | % | 772 | 100.00 | % | 29,995 | ||||||||
201 Sunridge Blvd.(8) | 9/30/2008 | 2008 | Warehouse/Distribution | 80.00 | % | 823 | 100.00 | % | 25,690 | ||||||||
Aspen Corporate Center 500(8)Nashville, TN | 9/30/2008 | 2008 | Office | 80.00 | % | 180 | 100.00 | % | 30,033 | ||||||||
125 Enterprise Parkway(8) | 12/10/2008 | 2008 | Warehouse/Distribution | 80.00 | % | 1,142 | 100.00 | % | 38,088 | ||||||||
AllPoints Midwest Bldg. 1(8)Indianapolis, IN | 12/10/2008 | 2008 | Warehouse/Distribution | 80.00 | % | 1,200 | 100.00 | % | 41,428 | ||||||||
Celebration Office Center(8) (6) | 5/13/2009 | 2009 | Office | 80.00 | % | 101 | 100.00 | % | 13,640 | ||||||||
22535 Colonial Pkwy(8) (6) | 5/13/2009 | 2009 | Office | 80.00 | % | 90 | 100.00 | % | 11,596 | ||||||||
Fairfield Distribution Ctr. IX(8)(6)Tampa, FL | 5/13/2009 | 2008 | Warehouse/Distribution | 80.00 | % | 136 | 100.00 | % | 7,151 | ||||||||
Total Unconsolidated Properties(7) | 5,976 | 99.71 | % | 305,202 | |||||||||||||
Total Properties(7) | 13,781 | 90.33 | % | $ | 1,025,024 | ||||||||||||
| (1) | Approximate total acquisition cost represents the pro rata purchase price inclusive of customary closing costs and acquisition fees/expenses for properties acquired prior to January 1, 2009. For properties acquired subsequent to January 1, 2009, it represents the pro rata purchase price exclusive of customary closing costs and acquisition fees/expenses. |
| (2) | Includes undeveloped land zoned for future use. |
| (3) | This property is unencumbered and not secured by mortgage debt. |
| (4) | Properties previously held for sale were transferred to continuing operations during the quarter ended September 30, 2008. |
| (5) | Includes the purchase prices of adjacent land parcels acquired on January 23, 2008. |
| (6) | The estimated acquisition cap rates for 13201 Wilfred Lane, 3011, 3055 & 3077 Comcast Place, 140 Depot Street, 12650 Ingenuity Drive, Crest Ridge Corporate Center, Celebration Office Center, 22535 Colonial Pkwy and Fairfield Distribution Ctr. IX were 8.7%, 9.2%, 8.7%, 8.1%, 8.7%, 9.3%, 8.6%, and 8.5%, respectively. Acquisition cap rate equals annualized in-place net operating income divided by total acquisition cost for the property. Annualized in-place net operating income equals, on an annualized cash basis as derived from leases in-place at the time we acquire the property, rental income and tenant reimbursements less property and related expenses (operating maintenance, management fees and real estate taxes) and excludes other non-property income and expenses, interest expense, depreciation and amortization and our company-level general and administrative expenses. |
| (7) | Does not include CBRE Strategic Partners Asia properties. |
| (8) | This property is held through the Duke joint venture. |
| (9) | This property is held through the Afton Ridge joint venture. |
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International Properties—Unconsolidated
CBRE Strategic Partners Asia
Our capital commitment is currently being pledged as collateral for borrowings of CBRE Strategic Partners Asia of which our pro-rata portion of such borrowings was approximately $7,412,000 based on our 5.07% ownership interest in CBRE Strategic Partners Asia at September 30, 2009. Our share of investment management and acquisition fees paid to the Investment Manager were approximately $75,000 and $225,000, respectively, for the three and nine months ended September 30, 2009, respectively. Through September 30, 2009, we had paid no fees to our Investment Advisor relating to this investment. Through September 30, 2009, we contributed $7,912,000 of our $20,000,000 CBRE Strategic Partners Asia capital commitment which was funded using net proceeds from our offering.
Property Type Concentration
Our property type concentrations as of September 30, 2009 are as follows (Net Rentable Square Feet and Approximate Total Acquisition Cost in thousands):
| Consolidated Properties | Unconsolidated Properties(1) | Consolidated & Unconsolidated Properties(1) | |||||||||||||||||||
Property Type | Properties | Net Rentable Square Feet | Approximate Total Acquisition Cost | Properties | Net Rentable Square Feet | Approximate Total Acquisition Cost | Properties | Net Rentable Square Feet | Approximate Total Acquisition Cost | ||||||||||||
Warehouse/ | 33 | 5,281 | $ | 264,447 | 7 | 5,309 | $ | 205,075 | 40 | 10,590 | $ | 469,522 | |||||||||
Office | 14 | 1,217 | 302,733 | 3 | 371 | 55,269 | 17 | 1,588 | 358,002 | ||||||||||||
Retail | 2 | 200 | 75,825 | 1 | 296 | 44,858 | 3 | 496 | 120,683 | ||||||||||||
Manufacturing | 8 | 1,107 | 76,817 | — | — | — | 8 | 1,107 | 76,817 | ||||||||||||
Total | 57 | 7,805 | $ | 719,822 | 11 | 5,976 | $ | 305,202 | 68 | 13,781 | $ | 1,025,024 | |||||||||
| (1) | Number of Properties and Net Rentable Square Feet for Unconsolidated Properties are at 100%. Approximate Total Acquisition Cost for Unconsolidated Properties is at our pro rata share of effective ownership. Does not include our investment in CBRE Strategic Partners Asia. |
Geographic Concentration
Our geographic concentrations as of September 30, 2009 are as follows (Net Rentable Square Feet and Approximate Total Acquisition Cost in thousands):
| Consolidated Properties | Unconsolidated Properties(1) | Consolidated & Unconsolidated Properties(1) | |||||||||||||||||||
| Properties | Net Rentable Square Feet | Approximate Total Acquisition Cost | Properties | Net Rentable Square Feet | Approximate Total Acquisition Cost | Properties | Net Rentable Square Feet | Approximate Total Acquisition Cost | |||||||||||||
Domestic | |||||||||||||||||||||
South Carolina | 29 | 3,645 | $ | 184,324 | — | — | $ | — | 29 | 3,645 | $ | 184,324 | |||||||||
Texas | 5 | 563 | 74,159 | 2 | 913 | 37,286 | 7 | 1,476 | 111,445 | ||||||||||||
North Carolina | 5 | 1,360 | 66,337 | 1 | 296 | 44,858 | 6 | 1,656 | 111,195 | ||||||||||||
Florida | 1 | 125 | 25,350 | 3 | 1,009 | 50,786 | 4 | 1,134 | 76,136 | ||||||||||||
California | 5 | 352 | 75,667 | — | — | — | 5 | 352 | 75,667 | ||||||||||||
Indiana | — | — | — | 2 | 1,831 | 68,578 | 2 | 1,831 | 68,578 | ||||||||||||
Minnesota | 2 | 452 | 43,759 | — | — | — | 2 | 452 | 43,759 | ||||||||||||
Virginia | 2 | 143 | 42,223 | — | — | — | 2 | 143 | 42,223 | ||||||||||||
Massachusetts | 2 | 568 | 38,755 | — | — | — | 2 | 568 | 38,755 | ||||||||||||
Ohio | — | — | — | 1 | 1,142 | 38,088 | 1 | 1,142 | 38,088 | ||||||||||||
Arizona | — | — | — | 1 | 605 | 35,573 | 1 | 605 | 35,573 | ||||||||||||
Tennessee | — | — | — | 1 | 180 | 30,033 | 1 | 180 | 30,033 | ||||||||||||
Georgia | 1 | 122 | 21,834 | — | — | — | 1 | 122 | 21,834 | ||||||||||||
Illinois | 1 | 185 | 18,170 | — | — | — | 1 | 185 | 18,170 | ||||||||||||
Total Domestic | 53 | 7,515 | 590,578 | 11 | 5,976 | 305,202 | 64 | 13,491 | 895,780 | ||||||||||||
International | |||||||||||||||||||||
United Kingdom | 4 | 290 | 129,244 | — | — | — | 4 | 290 | 129,244 | ||||||||||||
Total | 57 | 7,805 | $ | 719,822 | 11 | 5,976 | $ | 305,202 | 68 | 13,781 | $ | 1,025,024 | |||||||||
| (1) | Number of Properties and Net Rentable Square Feet for Unconsolidated Properties are at 100%. Approximate Total Acquisition Cost for Unconsolidated Properties is at our pro rata share of effective ownership. Does not include our investment in CBRE Strategic Partners Asia. |
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Significant Tenants
The following table details our largest tenants as of September 30, 2009 (in thousands):
| Consolidated Properties | Unconsolidated Properties(1) | Consolidated & Unconsolidated Properties(1) | |||||||||||||||||
Tenant | Primary Industry | Net Rentable Square Feet | Annualized Base Rent | Net Rentable Square Feet | Annualized Base Rent | Net Rentable Square Feet | Annualized Base Rent | ||||||||||||
1 | Comcast | Telecommunications | 220 | $ | 4,462 | — | $ | — | 220 | $ | 4,462 | ||||||||
2 | Amazon.com(2) | Internet Retail | — | — | 1,235 | 4,362 | 1,235 | 4,362 | |||||||||||
3 | SBM Offshore(3) | Petroleum and Mining | 171 | 4,277 | — | — | 171 | 4,278 | |||||||||||
4 | Unilever(4) | Consumer Products | — | — | 1,595 | 3,858 | 1,595 | 3,858 | |||||||||||
5 | Prime Distribution Services | Logistics and Distribution | — | — | 1,200 | 2,958 | 1,200 | 2,958 | |||||||||||
6 | American LaFrance | Vehicle Related Manufacturing | 513 | 2,892 | — | — | 513 | 2,892 | |||||||||||
7 | Kellogg’s | Consumer Product | — | — | 1,142 | 2,817 | 1,142 | 2,817 | |||||||||||
8 | B&Q | Home Furnishings/ Home Improvement | 104 | 2,748 | — | — | 104 | 2,748 | |||||||||||
9 | Regus Business Centers | Executive Office Suites | 86 | 2,626 | — | — | 86 | 2,626 | |||||||||||
10 | Syngenta Seed | Agriculture | 117 | 2,472 | — | — | 117 | 2,472 | |||||||||||
11 | REMEC | Defense and Aerospace | 133 | 2,448 | — | — | 133 | 2,448 | |||||||||||
12 | US General Services Administration | Government | 72 | 2,135 | — | — | 72 | 2,135 | |||||||||||
13 | Verizon Wireless(5) | Telecommunications | — | — | 180 | 2,117 | 180 | 2,117 | |||||||||||
14 | Kaplan(6) | Education | 125 | 2,054 | — | — | 125 | 2,054 | |||||||||||
15 | Best Buy | Specialty Retail | 238 | 1,657 | 30 | 317 | 268 | 1,973 | |||||||||||
16 | Lockheed Martin | Defense and Aerospace | 72 | 1,741 | — | — | 72 | 1,741 | |||||||||||
17 | Women’s Apparel Group | Internet Retail | 330 | 1,426 | — | — | 330 | 1,426 | |||||||||||
18 | Walgreens | Specialty Retail | 335 | 1,351 | — | — | 335 | 1,351 | |||||||||||
19 | Disney Vacation Development | Travel and Leisure | — | — | 101 | 1,264 | 101 | 1,264 | |||||||||||
20 | Capita Business Services | Business Services | 50 | 1,258 | — | — | 50 | 1,258 | |||||||||||
21 | CEVA Logistics | Logistics and Distribution | 316 | 1,239 | — | — | 316 | 1,239 | |||||||||||
22 | Echostar Satellite | Telecommunications | 316 | 1,200 | — | — | 316 | 1,200 | |||||||||||
23 | Trans Hold | Logistics and Distribution | 316 | 1,174 | — | — | 316 | 1,174 | |||||||||||
24 | Det Norske Veritas | Business Services | — | — | 90 | 994 | 90 | 994 | |||||||||||
25 | Wickes Building Supplies | Home Furnishings/ Home improvement | 40 | 991 | — | — | 40 | 991 | |||||||||||
| All Other (92 tenants) | 2,936 | 14,973 | 386 | 3,292 | 3,322 | 18,265 | |||||||||||||
| 6,490 | $ | 53,124 | 5,959 | $ | 21,979 | 12,449 | $ | 75,103 | |||||||||||
| (1) | Net Rentable Square Feet for Unconsolidated Properties is at 100%. Annualized Base Rent for Unconsolidated Properties is at our pro rata share of effective ownership. Does not include our investment in CBRE Strategic Partners Asia. |
| (2) | Our tenants are Amazon.com.azdc, Inc. in our Buckeye Logistics Center property and Amazon.com.indc, LLC in our AllPoints at Anson Bldg. 1 property, which are both wholly-owned subsidiaries of Amazon.com. |
| (3) | Our tenant is Atlantic Offshore Ltd., a wholly-owned subsidiary of SBM Offshore. |
| (4) | Our tenant is CONOPCO, Inc., a wholly-owned subsidiary of Unilever. |
| (5) | Verizon Wireless is the d/b/a for Cellco Partnership. |
| (6) | Our tenant is Iowa College Acquisitions Corp., an operating subsidiary of Kaplan Inc. The lease is guaranteed by Kaplan Inc. |
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Tenant Industries
Our tenants operate across a wide range of industries. The following table details our tenant-industry concentrations as of September 30, 2009 (in thousands):
| Consolidated Properties | Unconsolidated Properties(1) | Consolidated & Unconsolidated Properties(1) | |||||||||||||
Primary Tenant Industry Category | Net Rentable Square Feet | Annualized Base Rent | Net Rentable Square Feet | Annualized Base Rent | Net Rentable Square Feet | Annualized Base Rent | |||||||||
Consumer Products | 256 | $ | 1,305 | 2,747 | $ | 6,817 | 3,003 | $ | 8,122 | ||||||
Telecommunications | 536 | 5,669 | 180 | 2,117 | 716 | 7,786 | |||||||||
Logistics and Distribution | 910 | 3,375 | 1,337 | 3,427 | 2,247 | 6,802 | |||||||||
Internet Retail | 330 | 1,426 | 1,235 | 4,362 | 1,565 | 5,788 | |||||||||
Home Furnishings/Home Improvement | 549 | 5,078 | 35 | 391 | 584 | 5,469 | |||||||||
Specialty Retail | 619 | 4,156 | 75 | 712 | 694 | 4,868 | |||||||||
Vehicle Related Manufacturing | 800 | 4,291 | — | — | 800 | 4,291 | |||||||||
Petroleum and Mining | 171 | 4,277 | — | — | 171 | 4,277 | |||||||||
Defense and Aerospace | 204 | 4,189 | — | — | 204 | 4,189 | |||||||||
Business Services | 425 | 3,091 | 90 | 994 | 515 | 4,085 | |||||||||
Other Manufacturing | 804 | 2,933 | — | — | 804 | 2,933 | |||||||||
Executive Office Suites | 86 | 2,626 | — | — | 86 | 2,626 | |||||||||
Agriculture | 116 | 2,472 | — | — | 116 | 2,472 | |||||||||
Government | 72 | 2,135 | — | — | 72 | 2,135 | |||||||||
Education | 125 | 2,054 | — | 125 | 2.054 | ||||||||||
Financial Services | 185 | 1,627 | — | — | 185 | 1,627 | |||||||||
Travel and Leisure | — | — | 101 | 1,264 | 101 | 1,264 | |||||||||
Food Service and Retail | 108 | 796 | 14 | 278 | 122 | 1,074 | |||||||||
Pharmaceutical and Health Care Related | 123 | 834 | — | — | 123 | 834 | |||||||||
Apparel Retail | — | — | 91 | 818 | 91 | 818 | |||||||||
Other Retail | 22 | 123 | 48 | 676 | 70 | 799 | |||||||||
Professional Services | 49 | 667 | 6 | 123 | 55 | 790 | |||||||||
Totals | 6,490 | $ | 53,124 | 5,959 | $ | 21,979 | 12,449 | $ | 75,103 | ||||||
| (1) | Net Rentable Square Feet for Unconsolidated Properties is at 100%. Annualized Base Rent for Unconsolidated Properties is at our pro rata share of effective ownership. Does not include our investment in CBRE Strategic Partners Asia. |
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Tenant Lease Expirations
The following table sets forth a schedule of expiring leases for our consolidated and unconsolidated properties as of September 30, 2009 (in thousands):
| Consolidated Properties | Unconsolidated Properties(1) | Consolidated & Unconsolidated Properties(1) | |||||||||||||
| Expiring Net Rentable Square Feet | Expiring Base Rent | Expiring Net Rentable Square Feet | Expiring Base Rent | Expiring Net Rentable Square Feet | Expiring Base Rent | ||||||||||
2009 (Three months ending | 389 | $ | 1,474 | — | $ | — | 389 | $ | 1,474 | ||||||
2010 | 662 | 4,976 | — | — | 662 | 4,976 | |||||||||
2011 | 226 | 1,123 | — | — | 226 | 1,123 | |||||||||
2012 | 539 | 9,592 | 20 | 324 | 559 | 9,916 | |||||||||
2013 | 1,294 | 8,266 | 20 | 414 | 1,314 | 8,680 | |||||||||
2014 | 102 | 521 | 16 | 287 | 118 | 808 | |||||||||
2015 | 654 | 2,932 | — | — | 654 | 2,932 | |||||||||
2016 | 299 | 1,709 | 131 | 1,839 | 430 | 3,548 | |||||||||
2017 | 200 | 3,492 | 116 | 1,169 | 316 | 4,661 | |||||||||
2018 | 336 | 1,583 | 3,088 | 12,834 | 3,424 | 14,417 | |||||||||
2019 | 760 | 6,139 | 2,432 | 7,376 | 3,192 | 13,515 | |||||||||
Thereafter | 1,029 | 16,848 | 136 | 853 | 1,165 | 17,701 | |||||||||
Total | 6,490 | $ | 58,655 | 5,959 | $ | 25,096 | 12,449 | $ | 83,751 | ||||||
Weighted Average Expiration (years) | 7.74 | 9.38 | 8.23 | ||||||||||||
| (1) | Expiring Net Rentable Square Feet for Unconsolidated Properties is at 100%. Expiring Base Rent for Unconsolidated Properties is at our pro rata share of effective ownership. Does not include our investment in CBRE Strategic Partners Asia. |
Property Portfolio Size
Our portfolio size at the end of each quarter since commencement of our initial public offering through September 30, 2009 is as follows (Net Rentable Square Feet and Approximate Total Acquisition Cost in thousands):
| Consolidated Properties | Unconsolidated Properties(1) | Consolidated & Unconsolidated Properties(1) | |||||||||||||||||||
Cumulative Property Portfolio as of: | Properties | Net Rentable Square Feet | Approximate Total Acquisition Cost | Properties | Net Rentable Square Feet | Approximate Total Acquisition Cost | Properties | Net Rentable Square Feet | Approximate Total Acquisition Cost | ||||||||||||
9/30/2006 | 9 | 878 | $ | 86,644 | — | — | $ | — | 9 | 878 | $ | 86,644 | |||||||||
12/31/2006 | 9 | 878 | 86,644 | — | — | — | 9 | 878 | 86,644 | ||||||||||||
3/31/2007 | 9 | 878 | 86,644 | — | — | — | 9 | 878 | 86,644 | ||||||||||||
6/30/2007 | 10 | 928 | 110,491 | — | — | — | 10 | 928 | 110,491 | ||||||||||||
9/30/2007 | 42 | 5,439 | 348,456 | — | — | — | 42 | 5,439 | 348,456 | ||||||||||||
12/31/2007 | 44 | 5,576 | 353,594 | — | — | — | 44 | 5,576 | 353,594 | ||||||||||||
3/31/2008 | 47 | 6,257 | 426,856 | — | — | — | 47 | 6,257 | 426,856 | ||||||||||||
6/30/2008 | 47 | 6,257 | 426,856 | 1 | 605 | 35,636 | 48 | 6,862 | 462,492 | ||||||||||||
9/30/2008 | 49 | 6,483 | 486,777 | 6 | 3,307 | 193,773 | 55 | 9,790 | 680,550 | ||||||||||||
12/31/2008 | 52 | 6,771 | 582,682 | 8 | 5,649 | 273,205 | 60 | 12,420 | 855,887 | ||||||||||||
3/31/2009 | 52 | 6,771 | 582,717 | 8 | 5,649 | 273,130 | 60 | 12,420 | 855,847 | ||||||||||||
6/30/2009 | 53 | 7,106 | 598,103 | 11 | 5,976 | 305,308 | 64 | 13,082 | 903,411 | ||||||||||||
9/30/2009 | 57 | 7,805 | 719,822 | 11 | 5,976 | 305,202 | 68 | 13,781 | 1,025,024 | ||||||||||||
| (1) | Net Rentable Square Feet for unconsolidated properties is at 100%. Approximate Total Acquisition Cost is at our pro rata share of effective ownership and does not include our investment in CBRE Strategic Partners Asia. |
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Rental Operations
During the fourth quarter of 2008, management reevaluated the structure of its business and devised a new reportable segment structure. Our reportable segments consist of three types of commercial real estate properties for which our management internally evaluates operating performance and financial results: the Domestic Industrial Properties, Domestic Office Properties and International Office/Retail Properties. All periods presented have been revised to report our segment results under our new reportable segment structure. We evaluate the performance of our segments based on net operating income, defined as: rental income and tenant reimbursements less property and related expenses (operating and maintenance, management fees and real estate taxes) and excludes other non-property income and expenses, interest expense, depreciation and amortization, and our company-level general and administrative expenses. The following tables compare the net operating income for the three and nine months ended September 30, 2009 and 2008 (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
| 2009 | 2008 | 2009 | 2008 | ||||||||||
Domestic Industrial Properties | |||||||||||||
Revenues: | |||||||||||||
Rental | $ | 5,291 | $ | 4,996 | $ | 14,280 | $ | 15,778 | |||||
Tenant Reimbursements | 1,378 | 910 | 3,481 | 2,669 | |||||||||
Total Revenues | 6,669 | 5,906 | 17,761 | 18,447 | |||||||||
Property and Related Expenses: | |||||||||||||
Operating and Maintenance | 301 | 321 | 971 | 872 | |||||||||
General and Administrative | 54 | (47 | ) | 193 | 130 | ||||||||
Property Management Fee to Related Party | 92 | 86 | 272 | 286 | |||||||||
Property Taxes | 1,215 | 798 | 3,361 | 2,329 | |||||||||
Total Expenses | 1,662 | 1,158 | 4,797 | 3,617 | |||||||||
Net Operating Income | $ | 5,007 | $ | 4,748 | $ | 12,964 | $ | 14,830 | |||||
Domestic Office Properties | |||||||||||||
Revenues: | |||||||||||||
Rental | $ | 5,726 | $ | 2,507 | $ | 13,211 | $ | 5,129 | |||||
Tenant Reimbursements | 857 | 623 | 2,558 | 1,506 | |||||||||
Total Revenues | 6,583 | 3,130 | 15,769 | 6,635 | |||||||||
Property and Related Expenses: | |||||||||||||
Operating and Maintenance | 894 | 694 | 2,422 | 1,260 | |||||||||
General and Administrative | 44 | 23 | 145 | 44 | |||||||||
Property Management Fee to Related Party | 41 | 33 | 105 | 48 | |||||||||
Property Taxes | 878 | 420 | 2,096 | 805 | |||||||||
Total Expenses | 1,857 | 1,170 | 4,768 | 2,157 | |||||||||
Net Operating Income | $ | 4,726 | $ | 1,960 | $ | 11,001 | $ | 4,478 | |||||
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| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
International Office/Retail Properties | ||||||||||||||||
Revenues: | ||||||||||||||||
Rental | $ | 2,261 | $ | 1,264 | $ | 5,976 | $ | 2,724 | ||||||||
Tenant Reimbursements | 38 | 15 | 218 | 75 | ||||||||||||
Total Revenues | 2,299 | 1,279 | 6,194 | 2,799 | ||||||||||||
Property and Related Expenses: | ||||||||||||||||
Operating and Maintenance | 51 | 15 | 225 | 75 | ||||||||||||
General and Administrative | 27 | (3 | ) | 94 | 47 | |||||||||||
Property Management Fee to Related Party | 72 | 6 | 82 | 13 | ||||||||||||
Total Expenses | 150 | 18 | 401 | 135 | ||||||||||||
Net Operating Income | $ | 2,149 | $ | 1,261 | $ | 5,793 | $ | 2,664 | ||||||||
Reconciliation to Consolidated Net Loss | ||||||||||||||||
Total Segment Net Operating Income(1) | $ | 11,882 | $ | 7,969 | $ | 29,758 | $ | 21,972 | ||||||||
Interest Expense | 2,775 | 2,670 | 8,220 | 7,402 | ||||||||||||
General and Administrative | 857 | 707 | 2,478 | 1,878 | ||||||||||||
Investment Management Fee to Related Party | 2,098 | 1,016 | 5,584 | 2,495 | ||||||||||||
Acquisition Expenses | 2,536 | — | 3,534 | — | ||||||||||||
Depreciation and Amortization | 6,501 | 4,417 | 18,371 | 11,457 | ||||||||||||
| (2,885 | ) | (841 | ) | (8,429 | ) | (1,260 | ) | |||||||||
Interest and Other Income | 77 | 467 | 338 | 1,797 | ||||||||||||
Net Settlement Payments on Interest Rate Swaps | (203 | ) | — | (436 | ) | — | ||||||||||
(Loss) Gain on Interest Rate Swaps and Cap | (338 | ) | (58 | ) | 19 | (77 | ) | |||||||||
Loss on Note Payable at Fair Value | (109 | ) | — | (802 | ) | — | ||||||||||
Loss on transfer of held for sale real estate to continuing operations | — | (3,451 | ) | — | (3,451 | ) | ||||||||||
Loss Before (Provision) Benefit for Taxes and Equity in Income (Loss) of Unconsolidated Entities | (3,458 | ) | (3,883 | ) | (9,310 | ) | (2,991 | ) | ||||||||
(Provision) Benefit for Income Taxes | (44 | ) | 557 | (131 | ) | 41 | ||||||||||
Equity in Income (Loss) of Unconsolidated Entities | 74 | 379 | (1,775 | ) | 103 | |||||||||||
Net Loss | (3,428 | ) | (2,947 | ) | (11,216 | ) | (2,847 | ) | ||||||||
Net Loss Attributable to Non-Controlling Operating Partnership Units | 16 | 14 | 36 | 12 | ||||||||||||
Net Loss Attributable to CB Richard Ellis Realty Trust Shareholders | $ | (3,412 | ) | $ | (2,933 | ) | $ | (11,180 | ) | $ | (2,835 | ) | ||||
| (1) | Total Segment Net Operating Income is a Non-GAAP financial measure which may be useful as a supplemental measure for evaluating the relationship of each reporting segment to the combined total. This measure should not be viewed as an alternative measure of operating performance to our U.S. GAAP presentations provided. Segment “Net Operating Income” is defined as operating revenues (rental income, tenant reimbursements and other property income) less property and related expenses (property expenses, including real estate taxes) before depreciation and amortization expense. The Net Operating Income segment information presented consists of the same Net Operating Income segment information disclosed in Note 9 to our consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009. |
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The following table provides information regarding our tax basis and real estate taxes at each of our consolidated properties as of September 30, 2009:
Location | Property | Original Income Tax Basis | 2009 Annualized Real Estate Taxes | ||||||
San Diego, CA | REMEC Corporate Campus | $ | 26,667,000 | $ | 304,000 | ||||
Taunton, MA | 300 Constitution Drive | 19,805,000 | 330,000 | ||||||
Alpharetta, GA | Deerfield Commons I | 19,572,000 | 299,000 | ||||||
Alpharetta, GA | Deerfield Commons II | 2,262,000 | 50,000 | ||||||
Allen, TX | 505 Century | 6,095,000 | 117,000 | ||||||
Richardson, TX | 631 International | 5,407,000 | 107,000 | ||||||
Richardson, TX | 660 North Dorothy | 6,836,000 | 130,000 | ||||||
Bolingbrook, IL | Bolingbrook Point III | 18,170,000 | 203,000 | ||||||
Spartanburg, SC | Cherokee Corporate Park | 3,775,000 | 44,000 | ||||||
Spartanburg, SC | Community Cash Complex 1-5 | 7,987,000 | 136,000 | ||||||
Spartanburg, SC | Fairforest Bldgs 1-4 | 19,753,000 | 412,000 | ||||||
Spartanburg, SC | Fairforest Bldg. 5 | 16,968,000 | 249,000 | ||||||
Spartanburg, SC | Fairforest Bldg. 6 | 7,469,000 | 150,000 | ||||||
Spartanburg, SC | Fairforest Bldg. 7 | 5,626,000 | 129,000 | ||||||
Spartanburg, SC | Greenville/Spartanburg Ind. Pk | 3,388,000 | 66,000 | ||||||
Spartanburg, SC | Highway 290 Commerce Pk Bldgs | 20,083,000 | 368,000 | ||||||
Spartanburg, SC | HJ Park Bldg. 1 | 4,216,000 | 91,000 | ||||||
Charleston, SC | Jedburg Commerce Park | 41,991,000 | 416,000 | ||||||
Charlotte, NC | Kings Mountain I | 5,497,000 | 35,000 | ||||||
Charlotte, NC | Kings Mountain II | 11,311,000 | 56,000 | ||||||
Charleston, SC | Mount Holly Building | 6,208,000 | 72,000 | ||||||
Charleston, SC | North Rhett I | 10,302,000 | 313,000 | ||||||
Charleston, SC | North Rhett II | 7,073,000 | 63,000 | ||||||
Charleston, SC | North Rhett III | 4,812,000 | 66,000 | ||||||
Charleston, SC | North Rhett IV | 17,060,000 | 235,000 | ||||||
Charleston, SC | Orangeburg Park Bldg. | 5,474,000 | 141,000 | ||||||
Spartanburg, SC | Orchard Business Park 1 & 2 | 2,139,000 | 43,000 | ||||||
Winston-Salem, NC | Union Cross Bldg. I | 6,585,000 | 129,000 | ||||||
Winston-Salem, NC | Union Cross Bldg. II | 17,216,000 | 130,000 | ||||||
Lewisville, TX | Lakeside Office Center | 17,994,000 | 366,000 | ||||||
Charlotte, NC | Kings Mountain III | 25,728,000 | 76,000 | ||||||
Houston, TX | Enclave on the Lake | 37,827,000 | 837,000 | ||||||
Washington, DC | Avion Midrise III | 21,111,000 | 107,000 | ||||||
Washington, DC | Avion Midrise IV | 21,112,000 | 108,000 | ||||||
Minneapolis, MN | 13201 Wilfred Lane | 15,340,000 | 526,000 | ||||||
Oakland, CA | 3011, 3055 & 3077 Comcast Place | 49,000,000 | 792,000 | ||||||
Boston, MA | 140 Depot Street | 18,950,000 | 297,000 | ||||||
Orlando, FL | 12650 Ingenuity Drive | 25,350,000 | 368,000 | ||||||
Minneapolis, MN | Crest Ridge Corporate Center I | 28,419,000 | 16,000 | (1) | |||||
Coventry, UK | 602 Central Blvd. | 23,847,000 | N/A | ||||||
Reading, UK | Thames Valley Five | 29,572,000 | N/A | ||||||
Wakefield, UK | Albion Mills Retail Park | 22,098,000 | N/A | ||||||
Peterborough, UK | Maskew Retail Park | 53,727,000 | N/A | ||||||
Total | $ | 719,822,000 | $ | 8,420,000 | |||||
| (1) | This amount is based on the pre-construction completion assessed value of this property and a forthcoming post-construction completion date assessment is likely to increase our future annualized real-estate taxes on this property. |
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Recent Developments
Northpoint III
On October 15, 2009, the Duke joint venture acquired Northpoint III, located at 3300 Exchange Place, Lake Mary, FL, a suburb of Orlando, for approximately $18,240,000, exclusive of customary closing costs and acquisition fees which are both expensed as incurred. We own an 80% interest in the Duke joint venture, and we made cash contributions totaling approximately $14,406,000 to the Duke joint venture in connection with the acquisition, using the net proceeds from our current public offering.
Northpoint III is a 108,499 square foot four-story office building that was completed in 2001. Northpoint III is 100% leased to Florida Power Corporation d/b/a Progress Energy Florida, Inc., a major electric utility in Florida. Upon closing, we paid the Investment Advisor a $218,880 acquisition fee. The estimated acquisition cap rate for Northpoint III is 8.7%.(1)
| (1) | Acquisition cap rate equals annualized in-place net operating income divided by total acquisition cost for the property. Annualized in-place net operating income equals, on an annualized cash basis as derived from leases in-place at the time we acquire the property, rental income and tenant reimbursements less property and related expenses (operating maintenance, management fees and real estate taxes) and excludes other non-property income and expenses, interest expense, depreciation and amortization and our company-level general and administrative expenses. |
This section updates the ages of certain of our trustees included under the section “Management of the Company,” which begins on page 82 of our prospectus.
Our Executive Officers and Trustees
The following table sets forth certain information regarding our executive officers and trustees. Our board of trustees currently consists of five individuals, three of whom are independent.
Name | Age | Position | ||
| Jack A. Cuneo | 61 | Chairman of the Board of Trustees, President and Chief Executive Officer | ||
| Charles E. Black | 61 | Trustee* | ||
| Martin A. Reid | 53 | Trustee* | ||
| James M. Orphanides | 59 | Trustee* | ||
| Peter E. DiCorpo | 37 | Trustee | ||
| Laurie E. Romanak | 49 | Senior Vice President, Chief Financial Officer and Secretary | ||
| Philip L. Kianka | 53 | Chief Operating Officer and Executive Vice President |
| * | Denotes independent trustee. |
This section updates the ages of certain of the executive officers of our Investment Advisor included under thesection “The Investment Advisor,” which begins on page 86 of our prospectus.
The executive officers of the Investment Advisor are as follows:
Name | Age | Position | ||
| Jack A. Cuneo | 61 | President and Chief Executive Officer | ||
| Laurie E. Romanak | 49 | Managing Director | ||
| Douglas J. Herzbrun | 54 | Managing Director/Global Head of Research | ||
| Philip L. Kianka | 53 | Director of Operations | ||
| Christopher B. Allen | 42 | Director of Finance | ||
| Nickolai S. Dolya | 32 | Director of Capital Markets | ||
| Charles W. Hessel | 38 | Director of Investments | ||
| Hugh S. O’Beirne | 38 | Counsel | ||
| Brian D. Welcker | 60 | Director of Asset Management | ||
| G. Eric Fraser | 59 | Director of Accounting |
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This section contains certain information that supplements and updates the information under the section “Distribution Policy,” which begins on page 46 of our prospectus.
The following table presents total distributions declared and paid and distributions per share:
2009 Quarters | First | Second | Third | |||||||||
Total distributions declared and paid | $ | 10,066,000 | $ | 11,181,000 | $ | 12,767,000 | ||||||
Distributions per share | $ | 0.15 | $ | 0.15 | $ | 0.15 | ||||||
2008 Quarters | First | Second | Third | Fourth | ||||||||
Total distributions declared and paid | $ | 4,882,000 | $ | 5,907,000 | $ | 7,511,000 | $ | 8,989,000 | ||||
Distributions per share | $ | 0.14375 | $ | 0.14375 | $ | 0.15 | $ | 0.15 | ||||
Our first quarter 2009 distributions, paid on April 17, 2009, were funded 60.22% by cash flows provided by operating activities and 39.78% from uninvested proceeds from financings of our properties. In addition, first quarter distributions totaling $4,120,000 were reinvested in our common shares pursuant to our dividend reinvestment plan. Our second quarter 2009 distributions, paid on July 17, 2009, were funded 42.90% by cash flows provided by operating activities and 57.10% from uninvested proceeds from financings of our properties. In addition, second quarter distributions totaling $4,563,000 were reinvested in our common shares pursuant to our dividend reinvestment plan. Our third quarter 2009 distributions, paid on October 16, 2009, were funded 87.25% by cash flows provided by operating activities and 12.75% from uninvested proceeds from financings of our properties. In addition, third quarter distributions totaling $5,255,000 were reinvested in our common shares pursuant to our dividend reinvestment plan.
Our 2008 distributions were funded 67.56% by cash flows provided by operating activities and 32.44% from uninvested proceeds from financings of our properties. In addition, distributions totaling $8,918,000 were reinvested in our common shares pursuant to our dividend reinvestment plan during 2008.
Our board of trustees has approved a quarterly distribution to shareholders of $0.15 per common share for the fourth quarter of 2009. The distribution will be calculated on a daily basis and paid on January 15, 2010, to shareholders of record during the period from October 1, 2009 through and including December 31, 2009.
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Summary Selected Financial Data
This section supersedes the information under the section “Summary Selected Financial Data,” which begins on page 48 of our prospectus.
Summary Selected Financial and Operating Data
The following table sets forth summary selected financial and operating data on a consolidated basis for our company. You should read the following summary selected financial data in conjunction with our consolidated historical financial statements and the related notes and with “Management Discussion and Analysis of Financial Conditions and Results of Operations,” which are included in our incorporated documents.
The summary historical consolidated balance sheet information as of September 30, 2009 and 2008, December 31, 2008, 2007, 2006, 2005 and 2004 as well as the summary historical consolidated statement of operations information for the nine months ended September 30, 2009 and September 30, 2008 and for the periods ended December 31, 2008, 2007, 2006, 2005 and 2004 have been derived from our historical consolidated financial statements.
The summary selected financial information does not present an unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2009 or an unaudited pro forma condensed consolidated balance sheet as of September 30, 2009 because acquisitions during the period from January 1, 2009 through November 20, 2009 were not significant.
Our unaudited summary selected pro forma consolidated financial data is presented for the year ended December 31, 2008. Our unaudited summary selected pro forma consolidated statements of operations data for the year ended December 31, 2008 is based on our historical consolidated statements of operations and gives effect to the acquisitions of the following properties as if they were acquired on January 1, 2008 based on their statements of revenues and certain expenses, as applicable, for the (i) the Lakeside Office Center property, which was acquired on March 5, 2008, (ii) the Kings Mountain III property, which was acquired on March 14, 2008, (iii) the Thames Valley Five property, which was acquired on March 20, 2008, (iv) the Duke Buckeye Logistics Center property, which was acquired on June 12, 2008, (v) the Enclave on the Lake property, which was acquired on July 1, 2008, (vi) the Albion Mills Retail Park property, which was acquired on July 11, 2008, (vii) the Afton Ridge Shopping Center property, a joint venture interest which was acquired on September 18, 2008, (viii) the Maskew Retail Park property, which was acquired on October 23, 2008 and (ix) the Avion Midrise III & IV properties, acquired on November 18, 2008. Our unaudited pro forma financial information is not necessarily indicative of what our actual financial position and results of operations would have been for the period indicated, nor does it purport to represent our future results of operations.
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| Historical Consolidated | Pro Forma Consolidated | Historical Consolidated | ||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | Year Ended December 31, | Year Ended December 31, | July 1, 2004 (Date of Commencement) to December 31 2004 | |||||||||||||||||||||||||||||
| 2009 | 2008 | 2008 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||||||
(in thousands, except share data) | ||||||||||||||||||||||||||||||||
Statement of Operations Data(1): | ||||||||||||||||||||||||||||||||
Rental | $ | 33,467 | $ | 23,631 | $ | 44,517 | $ | 33,396 | $ | 14,028 | $ | 6,630 | $ | 4,614 | $ | 913 | ||||||||||||||||
Tenant Reimbursements | 6,257 | 4,250 | 7,648 | 6,753 | 2,633 | 1,830 | 872 | 120 | ||||||||||||||||||||||||
Total Revenue | 39,724 | 27,881 | 52,165 | 40,149 | 16,661 | 8,460 | 5,486 | 1,033 | ||||||||||||||||||||||||
Operating and Maintenance | 4,077 | 2,555 | 5,049 | 3,739 | 1,217 | 901 | 374 | 7 | ||||||||||||||||||||||||
Property Taxes | 5,457 | 3,134 | 6,243 | 5,479 | 1,778 | 1,103 | 563 | 113 | ||||||||||||||||||||||||
Interest | 8,220 | 7,402 | 12,462 | 10,323 | 5,049 | 1,784 | 1,195 | 117 | ||||||||||||||||||||||||
General and Administrative Expense | 2,910 | 2,098 | 3,507 | 3,320 | 1,853 | 851 | 359 | 123 | ||||||||||||||||||||||||
Investment Management Fee to Related Party | 5,584 | 2,495 | 5,376 | 3,964 | 1,547 | 739 | 603 | 230 | ||||||||||||||||||||||||
Acquisition Expenses | 3,534 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Class C Fee to Related Party | — | — | — | — | — | 145 | 459 | 197 | ||||||||||||||||||||||||
Depreciation and Amortization | 18,371 | 11,457 | 21,178 | 17,171 | 8,050 | 4,618 | 2,478 | 334 | ||||||||||||||||||||||||
Organizational Expenses | — | — | — | — | — | — | — | 109 | ||||||||||||||||||||||||
Total Expenses | 48,153 | 29,141 | 53,815 | 43,996 | 19,494 | 10,141 | 6,031 | 1,230 | ||||||||||||||||||||||||
Interest and Other Income | 338 | 1,797 | 2,104 | 2,104 | 2,855 | 255 | 460 | 111 | ||||||||||||||||||||||||
Net Settlement (Payments) Receipts on Interest Rate Swaps | (436 | ) | — | 65 | 65 | — | — | — | — | |||||||||||||||||||||||
Gain (Loss) on Interest Rate Swaps and Cap | 19 | (77 | ) | (1,496 | ) | (1,496 | ) | — | — | — | — | |||||||||||||||||||||
(Loss) Gain on Note Payable at Fair Value | (802 | ) | — | 1,168 | 1,168 | — | — | — | — | |||||||||||||||||||||||
Loss on Transfer of Real Estate Held for Sale to Continuing Operations | — | (3,451 | ) | (3,451 | ) | (3,451 | ) | — | — | — | — | |||||||||||||||||||||
Total Other Income and (Expenses) | (881 | ) | (1,731 | ) | (1,675 | ) | (1,675 | ) | 2,855 | 255 | 460 | 111 | ||||||||||||||||||||
(Loss) Income Before (Provision) Benefit for Income Taxes and Equity in (Loss) Income of Unconsolidated Entities | (9,310 | ) | (2,991 | ) | (3,325 | ) | (5,522 | ) | 22 | (1,426 | ) | (85 | ) | (86 | ) | |||||||||||||||||
(Provision) Benefit for Income Taxes | (131 | ) | 41 | 82 | 82 | (279 | ) | — | — | — | ||||||||||||||||||||||
Equity in (Loss) Income of Unconsolidated Entities(2) | (1,775 | ) | 103 | (619 | ) | (1,242 | ) | (150 | ) | — | — | — | ||||||||||||||||||||
Net Loss | (11,216 | ) | (2,847 | ) | (3,862 | ) | (6,682 | ) | (407 | ) | (1,426 | ) | (85 | ) | (86 | ) | ||||||||||||||||
Net Loss (Income) Attributable to Non-Controlling Operating Partnership Units | 36 | 12 | 15 | 26 | 4 | (1,058 | ) | (7 | ) | (3 | ) | |||||||||||||||||||||
Net Loss Attributable to CB Richard Ellis Realty Trust Shareholders | $ | (11,180 | ) | $ | (2,835 | ) | $ | (3,847 | ) | $ | (6,656 | ) | $ | (403 | ) | $ | (2,484 | ) | $ | (92 | ) | $ | (89 | ) | ||||||||
Per Share Data: | ||||||||||||||||||||||||||||||||
Basic and Diluted Net Loss Per Share—Attributable to CB Richard Ellis Realty Trust Shareholders | $ | (0.15 | ) | $ | (0.07 | ) | $ | (0.08 | ) | $ | (0.14 | ) | $ | (0.02 | ) | $ | (0.35 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||||||
Weighted Average Common Shares Outstanding—Basic and Diluted | 75,649,787 | 41,444,884 | 46,089,680 | 46,089,680 | 18,545,418 | 7,010,722 | 6,967,762 | 6,893,961 | ||||||||||||||||||||||||
Dividends Declared Per Share | $ | 0.45 | $ | 0.44 | $ | 0.59 | $ | 0.59 | $ | 0.54 | $ | 0.50 | $ | 0.42 | $ | 0.08 | ||||||||||||||||
| (1) | The pro forma statement of operations for the nine months ended September 30, 2009 is excluded from the presentation because the 2009 acquisitions were not significant. |
| (2) | Included in equity in loss of unconsolidated entities is an impairment for our unconsolidated investment in CBRE Strategic Partners Asia in the amount of $2,505,000 for the nine months ended September 30, 2009 and $1,064,000 for the year ended December 31, 2008. |
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| Historical Consolidated | Historical Consolidated | ||||||||||||||||||||
| September 30, | December 31, | ||||||||||||||||||||
| 2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||
(in thousands) | |||||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||
Investments in Real Estate, After Accumulated Depreciation and Amortization | $ | 593,486 | $ | 417,510 | $ | 484,827 | $ | 309,805 | $ | 70,650 | $ | 57,163 | $ | 43,946 | |||||||
Investment in Unconsolidated Entities | 161,643 | 115,639 | 131,703 | 101 | — | — | — | ||||||||||||||
Total Assets | 954,803 | 626,499 | 709,920 | 435,751 | 97,807 | 94,118 | 73,704 | ||||||||||||||
Notes Payable | 212,742 | 154,047 | 177,161 | 116,876 | 34,975 | 34,975 | 13,250 | ||||||||||||||
Loan Payable | — | — | — | 45,000 | — | — | — | ||||||||||||||
Total Liabilities | 258,483 | 189,106 | 220,249 | 189,224 | 44,834 | 41,510 | 18,461 | ||||||||||||||
Non-Controlling Interest | 2,464 | 2,464 | 2,464 | 2,464 | 2,464 | 250 | 250 | ||||||||||||||
Shareholders’ Equity | 693,856 | 434,929 | 487,207 | 244,063 | 50,509 | 52,358 | 54,993 | ||||||||||||||
Total Liabilities, Non-Controlling Interest and Shareholders’ Equity | 954,803 | 626,499 | 709,920 | 435,751 | 97,807 | 94,118 | 73,704 | ||||||||||||||
| (1) | The pro forma consolidated balance sheets as of September 30, 2009 are excluded from the presentation because the 2009 acquisitions were not significant. |
Non-GAAP Supplemental Financial Measure: Funds from Operations
Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry analysts and investors consider presentations of operating results for REITs that use historical cost accounting to be insufficient by themselves. Consequently, the National Association of Real Estate Investment Trusts, or NAREIT, created Funds from Operations, or FFO, as a supplemental measure of REIT operating performance.
FFO is a non-GAAP measure that is commonly used in the real estate industry. The most directly comparable GAAP measure to FFO is net income. FFO, as we define it, is presented as a supplemental financial measure. Management believes that FFO is a useful supplemental measure of REIT performance. FFO does not present, nor do we intend for it to present, a complete picture of our financial condition and/or operating performance. We believe that net income, as computed under GAAP, appropriately remains the primary measure of our performance and that FFO, when considered in conjunction with net income, improves the investing public’s understanding of the operating results of REITs and makes comparisons of REIT operating results more meaningful.
We compute FFO in accordance with standards established by NAREIT. Modifications to the NAREIT calculation of FFO are common among REITs, as companies seek to provide financial measures that meaningfully reflect their business and provide greater transparency to the investing public as to how their management team considers their results of operations. As a result, our FFO may not be comparable to FFO as reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than we do. The revised NAREIT White Paper on FFO defines FFO as net income or loss computed in accordance with GAAP, excluding extraordinary items, as defined by GAAP, and gains and losses from sales of depreciable operating property, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustment for unconsolidated partnerships and joint ventures.
Management believes that NAREIT’s definition of FFO reflects the fact that real estate, as an asset class, generally appreciates over time, and that depreciation charges required by GAAP do not always reflect the underlying economic realities. Likewise, the exclusion from NAREIT’s definition of FFO of gains and losses from the sales of previously depreciated operating real estate assets, allows investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT’s activity and assists in
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comparing those operating results between periods. Thus, FFO provides a performance measure that, when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates and operating costs. Management also believes that FFO provides useful information to the investment community about our financial performance when compared to other REITs, since FFO is generally recognized as the industry standard for reporting the operations of REITs.
In addition to presenting FFO in accordance with the NAREIT definition, we also disclose FFO, as adjusted, which excludes the effects of acquisition costs and any non-cash impairment charges. We believe that adjusting FFO to exclude these impairment charges more appropriately presents our results of operations on a comparative basis. The items that we exclude from FFO, as adjusted, are subject to significant fluctuations from period to period that cause both positive and negative effects on our results of operations, often in inconsistent and unpredictable directions. The economics underlying these excluded items are not the primary factors in management’s decision-making process. Period to period fluctuations in these items can be driven by accounting for short-term factors that are not relevant to long-term investment decisions, long-term capital structures or long-term tax planning and tax structuring decisions. Therefore, while our FFO, as adjusted, clearly differs from NAREIT’s definition of FFO, and may not be comparable to similarly named measures of other REITs and real estate companies, we believe that it provides a meaningful supplemental measure of our operating performance. We believe that investors are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in planning and executing our business strategy, thus fostering a greater degree of transparency into our management process.
Neither FFO, nor FFO as adjusted, represents cash generated from operating activities in accordance with GAAP and should not be considered as alternatives to (i) net income (determined in accordance with GAAP), as indications of our financial performance, or (ii) to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to make cash distributions. We believe that to further understand our performance, each of FFO and FFO, as adjusted, should be compared with our reported net income and considered in addition to cash flows in accordance with GAAP, as presented in our Consolidated Financial Statements.
The following table presents our FFO and FFO, as adjusted, for the three months ended September 30, 2009, June 30, 2009, March 31, 2009 and December 31, 2008 (in thousands):
| Three Months Ended | ||||||||||||||||
| September 30, 2009 | June 30, 2009 | March 31, 2009 | December 31, 2008 | |||||||||||||
Reconciliation of net loss to funds from operations: | ||||||||||||||||
Net Loss Attributable to CB Richard Ellis Realty Trust Shareholders | $ | (3,412 | ) | $ | (4,238 | ) | $ | (3,529 | ) | $ | (3,822 | ) | ||||
Adjustments: | ||||||||||||||||
Non-controlling interest | (16 | ) | (8 | ) | (13 | ) | (14 | ) | ||||||||
Net effect of FFO adjustment from unconsolidated entities(1) | 3,891 | 3,516 | 3,261 | 2,571 | ||||||||||||
Real estate depreciation and amortization | 6,501 | 6,148 | 5,722 | 5,714 | ||||||||||||
FFO | $ | 6,964 | 5,418 | 5,441 | 4,449 | |||||||||||
Other Adjustments: | ||||||||||||||||
Acquisition expenses | 2,536 | $ | 998 | — | — | |||||||||||
Impairment loss in unconsolidated entity | 214 | 1,424 | 867 | 1,064 | ||||||||||||
FFO, as adjusted | 9,714 | $ | 7,840 | $ | 6,308 | $ | 5,513 | |||||||||
FFO per share (basic and diluted) | $ | 0.08 | $ | 0.07 | $ | 0.08 | $ | 0.07 | ||||||||
FFO, as adjusted, per share (basic and diluted) | $ | 0.11 | $ | 0.11 | $ | 0.09 | $ | 0.09 | ||||||||
| (1) | Represents our share of the FFO adjustments allowable under the NAREIT definition (primarily depreciation). |
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Compensation to Investment Advisor and Dealer Manager; Equity Investment by an Affiliate of the Investment Advisor
This section replaces the first sentence of footnote 2 which appears in the fee table under the sections “Summary—Q: What are the fees that we pay to the Investment Advisor, its affiliates and the Dealer Manager in connection with this offering?” which begins on page 10 of our prospectus and “Compensation to Investment Advisor and Dealer Manager; Equity Investment by an Affiliate of the Investment Advisor,” which begins on page 91 of our prospectus.
(2) We reimburse the Investment Advisor for cumulative organizational and offering expenses incurred by the Investment Advisor on our behalf, which may include up to approximately $3,000,000 of organizational and offering expenses incurred by our Investment Advisor on our behalf in connection with our initial public offering which commenced on October 24, 2006 and was terminated on January 29, 2009.
The fifth paragraph following the caption “Description of Shares—Share Redemption Program” beginning on page 106 of our prospectus is deleted and replaced in its entirety with the following:
Redemption of shares, when requested, will be made quarterly and, in the event our available cash flow is insufficient to fund all redemption requests, each shareholder’s request will be reduced on a pro rata basis. Alternatively, if we do not have such funds available, at the time when redemption is requested, a shareholder can (i) withdraw his or her request for redemption, or (ii) ask that we carry over his or her request to the next quarterly period, if any, when sufficient funds become available. If a shareholder does not make a subsequent request, we will treat the initial redemption request as cancelled.
This section contains certain information that supplements the description of our share redemption program following the caption “Description of Shares—Share Redemption Program” beginning on page 106 of our prospectus.
For the year ended December 31, 2008, we received requests to redeem 696,800.37 common shares pursuant to our share redemption program. We redeemed 100% of the redemption requests for the year ended December 31, 2008 at an average price per share of $8.91. For the nine month period ended September 30, 2009, we received requests to redeem 1,970,532.95 common shares pursuant to our share redemption program. We redeemed 100% of the redemption requests for the nine month period ended September 30, 2009 at an average price per share of $8.99. We funded share redemptions for the periods noted above from the proceeds of the sale of our common shares pursuant to our dividend reinvestment plan.
The following disclosure shall be added as a new section entitled “CBRE Advisors LLC” which shall begin on page 53 of our prospectus immediately following the description of “CB Richard Ellis Realty Trust.”
CBRE Advisors LLC
Our Investment Advisor is responsible for managing our affairs on a day-to-day basis pursuant to an advisory agreement. We have no employees and therefore depend on our Investment Advisor (whose officers are fully dedicated to the operations of our Investment Advisor) to implement and execute our operating policies and strategies. Through our Investment Advisor, we have access to the resources and experience of CBRE Investors and CB Richard Ellis. We benefit from the investment expertise and experience of our Investment Advisor, whose senior officers have significant experience in the real estate industry, including extensive acquisition, disposition and financing experience. Our Investment Advisor conducts a disciplined, research-based investment process, utilizing market intelligence and research data from CB Richard Ellis and its affiliates. It also seeks to
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leverage the long-standing relationships that CB Richard Ellis and its affiliates have in many major global markets to source, evaluate, underwrite and close attractive real estate investments on our behalf. We believe that these relationships and the access that they afford place our Investment Advisor in a strong position to execute our business strategy and adapt to changing market conditions.
Our Investment Advisor was organized as a Delaware limited liability company in June 2004 and commenced operations in July 2004. Our Investment Advisor is a majority-owned subsidiary of our sponsor, CBRE Investors, which is an indirect wholly-owned subsidiary of CB Richard Ellis (NYSE: CBG), which is a publicly-traded company and files reports and other information with the SEC. As a real estate operating company, CB Richard Ellis’ business and financial condition (and therefore the business and financial condition of our Investment Advisor) can be affected by macro real estate market conditions and other factors affecting commercial real estate, including, without limitation, credit market stability, interest rate levels, global, national, regional and local economic conditions and supply and demand real estate and real estate investments.
This section contains certain information that supplements and updates the information under the section “Experts,” which begins on page 148 of our prospectus.
The combined statements of assets, liabilities and partners’ capital and combined schedules of real estate related investments of CB Richard Ellis Strategic Partners Asia II, L.P. and CB Richard Ellis Strategic Partners Asia II-A, L.P., Cayman Islands exempted limited partnerships, as of December 31, 2008 and 2007 and the related combined statements of operations, partners’ capital and cash flows for the year ended December 31, 2008 and the period from July 9, 2007 (inception) through December 31, 2007, have been incorporated in this Supplement No. 13 by reference from the CB Richard Ellis Realty Trust Amendment No. 1 to the Annual Report on Form 10-K/A for the year ended December 31, 2008, in reliance upon the reports of KPMG (for 2008) and KPMG LLP (for 2007), independent auditors, incorporated by reference herein, and upon the authority of said firms as experts in accounting and auditing.
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Incorporation of Certain Information by Reference
This Supplement No. 13 to our prospectus dated April 29, 2009 “incorporates by reference” certain information that we file with the SEC, which means that we can disclose important information to you by referring you to those documents that are considered part of this prospectus. The following documents filed with the SEC are incorporated by reference into this Supplement No. 13:
| • | Our Annual Report on Form 10-K for the year ended December 31, 2008, filed on March 31, 2009; |
| • | Amendment No. 1 to our Annual Report on Form 10-K/A for the year ended December 31, 2008, filed on June 26, 2009; |
| • | Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, filed on May 15, 2009; |
| • | Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, filed on August 14, 2009; |
| • | Our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, filed on November 16, 2009; |
| • | Our Current Report on Form 8-K/A, dated July 1, 2008, filed on July 17, 2008; |
| • | Our Current Report on Form 8-K/A, dated September 18, 2008, filed on December 4, 2008; |
| • | Our Current Report on Form 8-K/A, dated October 23, 2008, filed on January 8, 2009; |
| • | Our Current Report on Form 8-K, dated January 12, 2009, filed on January 13, 2009; |
| • | Our Current Report on Form 8-K, dated January 22, 2009, filed on January 22, 2009; |
| • | Our Current Report on Form 8-K, dated January 30, 2009, filed on February 5, 2009; |
| • | Our Current Report on Form 8-K, dated February 12, 2009, filed on February 18, 2009; |
| • | Our Current Report on Form 8-K, dated March 17, 2009, filed on March 23, 2009; |
| • | Our Current Report on Form 8-K, dated June 16, 2009, filed on June 22, 2009; |
| • | Our Proxy Statement on Schedule 14A for our 2009 Annual Meeting of Shareholders, filed on April 16, 2009; and |
| • | Description of our common shares of beneficial interest in the Registration Statement on Form 8-A, filed on April 29, 2008. |
You can obtain any of the documents incorporated by reference in this Supplement No. 13 from us, or from the SEC through the SEC’s website at the addresswww.sec.gov. We will furnish without charge to you, on written or oral request, a copy of any or all of the documents incorporated by reference, other than exhibits to such documents. You should direct any written requests for documents to CB Richard Ellis Realty Trust, 17 Hulfish Street, Suite 280, Princeton, New Jersey 08542, or call (609) 683-4900. Such documents may also be accessed on our website atwww.cbrerealtytrust.com. The information found on, or otherwise accessible through, our website is not incorporated information and does not form a part of this prospectus or any other report or document we file or furnish with the SEC.
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Index to Consolidated Financial Statements
PRO FORMA FINANCIAL INFORMATION: DECEMBER 31, 2008:
Pro Forma Condensed Consolidated Financial Statements (unaudited) | F-2 | |
| F-3 | ||
Notes to Pro Forma Condensed Consolidated Financial Statements (unaudited) | F-4 |
F-1
CB RICHARD ELLIS REALTY TRUST
Pro Forma Condensed Consolidated Financial Statements
(unaudited)
The following unaudited pro forma condensed consolidated statements of operations of CB Richard Ellis Realty Trust (the “Company”) including its consolidated subsidiaries, for the year ended December 31, 2008 is based on the historical consolidated statements of operations of CB Richard Ellis Realty Trust and the statements of revenues and certain expenses, as applicable, for (i) the Lakeside Office Center property (“Lakeside”), which was acquired on March 5, 2008, (ii) Kings Mountain III (“KM III”), which was acquired on March 14, 2008 (iii) the Thames Valley Five property (“TVF”), which was acquired on March 20, 2008, (iv) the Duke Buckeye Logistics Center property (“Duke Buckeye”) which was contributed to the Duke joint venture on June 12, 2008, (v) the Enclave on the Lake property (“Enclave”), which was acquired on July 1, 2008. (vi) Albion Mills Retail Center (“Albion Mills”), which was acquired on July 11, 2008, (vii) Afton Ridge Shopping Center (“Afton Ridge”), a joint venture interest in which the Company acquired on September 18, 2008, (viii) the Maskew Retail Park property (“Maskew”) which was acquired on October 23, 2008, (ix) the Avion Midrise III & IV property (“Avion”) which was acquired on November 18, 2008.
The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2008 is presented as if the acquisitions of Lakeside, TVF, KM III, Duke Buckeye, Enclave, Albion Mills, Afton Ridge, Maskew and Avion had taken place on January 1, 2008.
The unaudited pro forma condensed consolidated statements of operations should be read in conjunction with the statements of operations of CB Richard Ellis Realty Trust and the statements of revenues and certain expenses of Afton Ridge, Enclave, Lakeside, Maskew and Avion along with the accompanying notes thereto. The unaudited pro forma condensed consolidated statements of operations do not purport to represent our results of operations that would actually have occurred assuming the acquisitions of Lakeside, KM III, TVF, Duke Buckeye, Enclave, Albion Mills, Afton Ridge, Maskew and Avion properties had occurred on January 1, 2008, nor do they purport to project our results of operations as of any future date or for any future period.
Our unaudited pro-forma financial information is not necessarily indicative of what our actual financial position and results of operations would have been for the period indicated, nor does it purport to represent our future results of operations. The unaudited pro forma condensed consolidated statement of operations and consolidated balance sheet for the nine months ended September 30, 2009 has not been included in the presentation of these unaudited pro forma financial statements due to the fact that the acquisitions during the period from January 1, 2009 through November 20, 2009 were not significant.
F-2
CB RICHARD ELLIS REALTY TRUST
Pro Forma Condensed Consolidated Statements of Operations
For the Year Ended December 31, 2008 (unaudited)
(In Thousands, Except Share Data)
| CB Richard Ellis Realty Trust Historical | Lakeside | KMIII | TVF | Duke- Buckeye | Enclave | Afton Ridge | Maskew | Avion | Enclave Pro Forma Adjustments | Albion Mills Pro Forma Adjustments | Afton Ridge Pro Forma Adjustments | Maskew Pro Forma Adjustments | Avion Pro Forma Adjustments | Consolidated Company Pro Forma | ||||||||||||||||||||||||||||||||||||||||||
| A | B | C | D | E | F | G | H | I | J | K | L | M | N | |||||||||||||||||||||||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rental | $ | 33,396 | $ | 364 | $ | 1 | $ | 494 | $ | — | $ | 2,091 | $ | — | $ | 3,442 | $ | 2,708 | $ | 252 | $ | 814 | $ | — | $ | 317 | $ | 638 | $ | 44,517 | ||||||||||||||||||||||||||
Tenant Reimbursements | 6,753 | 121 | — | 4 | — | 221 | — | 133 | 345 | — | — | — | 11 | 60 | 7,648 | |||||||||||||||||||||||||||||||||||||||||
Total Revenues | 40,149 | 485 | 1 | 498 | — | 2,312 | — | 3,575 | 3,053 | 252 | 814 | — | 328 | 698 | 52,165 | |||||||||||||||||||||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating and Maintenance | 3,739 | 90 | 8 | 4 | — | 591 | — | 136 | 400 | — | — | — | 11 | 70 | 5,049 | |||||||||||||||||||||||||||||||||||||||||
Property Taxes | 5,479 | 37 | 1 | — | — | 346 | — | — | 323 | — | — | — | — | 57 | 6,243 | |||||||||||||||||||||||||||||||||||||||||
Interest | 10,323 | — | — | — | — | 514 | — | — | 938 | — | 272 | — | — | 415 | 12,462 | |||||||||||||||||||||||||||||||||||||||||
General and Administrative | 3,320 | — | — | — | — | 44 | — | 15 | 108 | — | — | — | 1 | 19 | 3,507 | |||||||||||||||||||||||||||||||||||||||||
Management Fees to Related Party | 3,964 | 26 | 31 | 40 | 94 | — | — | — | — | 145 | 94 | 257 | 372 | 353 | 5,376 | |||||||||||||||||||||||||||||||||||||||||
Depreciation and Amortization | 17,171 | 170 | 147 | 275 | 10 | — | — | — | — | 1,056 | 229 | — | 780 | 1,340 | 21,178 | |||||||||||||||||||||||||||||||||||||||||
Total Expenses | 43,996 | 323 | 187 | 319 | 104 | 1,495 | — | 151 | 1,769 | 1,201 | 595 | 257 | 1,164 | 2,254 | 53,815 | |||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest and Other Income | 2,104 | — | — | — | — | — | — | — | — | — | — | — | — | — | 2,104 | |||||||||||||||||||||||||||||||||||||||||
Loss on Interest Rate Swaps and Cap | (1,496 | ) | — | — | — | — | — | — | — | — | — | — | — | — | — | (1,496 | ) | |||||||||||||||||||||||||||||||||||||||
Gain on Note Payable at Fair Value | 1,168 | — | — | — | — | — | — | — | — | — | — | — | — | — | 1,168 | |||||||||||||||||||||||||||||||||||||||||
Loss on Transfer of Real Estate Held for Sale to Continuing Operations | (3,451 | ) | — | — | — | — | — | — | — | — | — | — | — | — | — | (3,451 | ) | |||||||||||||||||||||||||||||||||||||||
Total Other Income and Expenses | (1,675 | ) | — | — | — | — | — | — | — | — | — | — | — | — | — | (1,675 | ) | |||||||||||||||||||||||||||||||||||||||
(Loss) Income Before, Benefit for Income Taxes and Equity in Loss of Unconsolidated Entities | (5,522 | ) | 162 | (186 | ) | 179 | (104 | ) | 817 | — | 3,424 | 1,284 | (949 | ) | 219 | (257 | ) | (836 | ) | (1,556 | ) | (3,325 | ) | |||||||||||||||||||||||||||||||||
BENEFIT FOR INCOME TAXES | 82 | — | — | — | — | — | — | — | — | — | — | — | — | — | 82 | |||||||||||||||||||||||||||||||||||||||||
EQUITY IN (LOSS) INCOME OF UNCONSOLIDATED ENTITIES | (1,242 | ) | — | — | — | (111 | ) | — | 1,259 | — | — | — | — | (525 | ) | — | — | (619 | ) | |||||||||||||||||||||||||||||||||||||
NET (LOSS) INCOME | (6,682 | ) | 162 | (186 | ) | 179 | (215 | ) | 817 | 1,259 | 3,424 | 1,284 | (949 | ) | 219 | (782 | ) | (836 | ) | (1,556 | ) | (3,862 | ) | |||||||||||||||||||||||||||||||||
NET LOSS (INCOME) ATTRIBUTABLE TO NON-CONTROLLING OPERATING PARTNERSHIP UNITS | 26 | (1 | ) | 1 | (1 | ) | 1 | — | — | — | — | 1 | (1 | ) | (2 | ) | (10 | ) | 1 | 15 | ||||||||||||||||||||||||||||||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO CB RICHARD ELLIS REALTY TRUST SHAREHOLDERS | $ | (6,656 | ) | $ | 161 | $ | (185 | ) | $ | 178 | $ | (214 | ) | $ | 817 | $ | 1,259 | $ | 3,424 | $ | 1,284 | $ | (948 | ) | $ | 218 | $ | (784 | ) | $ | (846 | ) | $ | (1,555 | ) | $ | (3,847 | ) | ||||||||||||||||||
Basic and Diluted Net Loss per Share – Attributable to CB Richard Ellis Realty Trust Shareholders | $ | (0.14 | ) | $ | (0.08 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Common Shares Outstanding – Basic and Diluted | 46,089,680 | 46,089,680 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the pro forma condensed consolidated financial statements.
F-3
CB RICHARD ELLIS REALTY TRUST
Notes to Pro Forma Condensed Consolidated Financial Statements
(unaudited)
| 1. | Adjustments to Pro Forma Condensed Consolidated Statements of Operations |
The adjustments to the pro forma condensed consolidated statement of operations of the Company for the year ended December 31, 2008 are as follows:
(A) Reflects the historical condensed consolidated statement of operations of the Company for the year ended December 31, 2008.
(B) Reflects the pro forma adjustment for Lakeside in order to present the operations as if the property was acquired on January 1, 2008. The Company acquired Lakeside on March 5, 2008. The pro forma adjustment recognizes revenues and operating expenses, depreciation and amortization expense and an increase in the investment management fee through March 4, 2008 (date prior to acquisition).
Net (income) attributable to non-controlling operating units reflects an adjustment for the allocable portion of the pro forma income of the Lakeside property.
(C) Reflects the pro forma adjustment for KM III in order to present the operations as if the property was acquired on January 1, 2008. The Company acquired KM III on March 14, 2008. The pro forma adjustment recognizes revenues and operating expenses, depreciation and amortization expense and an increase in the investment management fee through March 13, 2008 (date prior to acquisition).
Net loss attributable to non-controlling operating units reflects an adjustment for the allocable portion of the pro forma loss of the KM III property.
(D) Reflects the pro forma adjustment for TVF in order to present the operations as if the property was acquired on January 1, 2008. The Company acquired TVF on March 20, 2008. The pro forma adjustment recognizes revenues and operating expenses, depreciation and amortization expense and an increase in the investment management fee through March 19, 2008 (date prior to acquisition).
Net (income) attributable to non-controlling operating units reflects an adjustment for the allocable portion of the pro forma of the TVF property.
(E) Reflects the pro forma adjustment of equity in income of unconsolidated interest in Duke Buckeye as if the property was acquired on January 1, 2008. The property was contributed to the joint venture on June 12, 2008. Equity in loss of unconsolidated interest is presented to include revenues, direct operating expenses, and depreciation and amortization expense through June 11, 2008 (the date prior to contribution into the joint venture). Rental revenues are recorded on a straight line basis by the unconsolidated joint venture. The pro forma adjustments also include investment management fees and depreciation and amortization expense associated with direct Company acquisition costs outside of the joint venture.
Net loss attributable to non-controlling operating units reflects an adjustment for the allocable portion of the pro forma loss of the Duke Buckeye property.
(F) Reflects the historical statement of operations for the six months ended June 30, 2008 for the Enclave property in order to present the operations as if the property was acquired on January 1, 2008. The Company acquired Enclave on July 1, 2008. Revenues and operating expenses are presented on an accrual basis of accounting. Rental revenues are recorded on a straight line basis. Pro forma depreciation, amortization and investment management fee are included in the pro forma adjustments reflected in (J).
F-4
CB RICHARD ELLIS REALTY TRUST
Notes to Pro Forma Condensed Consolidated Financial Statements
(unaudited)
(G) Reflects the historical statement of equity in income of unconsolidated interest in Afton Ridge for the six months ended June 30, 2008 as if the property was acquired on January 1, 2008. A joint venture interest in the property was acquired on September 18, 2008. Equity in income of unconsolidated entity is presented to include revenues and direct operating expenses through June 30, 2008. Rental revenues are recorded on a straight line basis by the unconsolidated joint venture. Pro forma depreciation, amortization, interest expense and investment management fee are included in the pro forma adjustments reflected in (L).
(H) Reflects the historical statement of operations for the nine months ended September 30, 2008 for the Maskew property in order to present the operations as if the property was acquired on January 1, 2008 The Company acquired Maskew on October 23, 2008. Revenues and operating expenses are presented on an accrual basis of accounting. Rental revenues are recorded on a straight line basis. Pro forma depreciation and investment management fee are included in the pro forma adjustment reflected in (M).
(I) Reflects the historical statement of operations for the nine months ended September 30, 2008 for the Avion property in order to present the operations as if the property was acquired on January 1, 2008. The Company acquired Avion on November 18, 2008. Revenues and operating expenses are presented on an accrual basis of accounting. Rental revenues are recorded on a straight line basis. Pro forma depreciation, amortization and investment management fee are included in the pro forma adjustment reflected in (N).
(J) The additional pro forma adjustments for Enclave reflect the increase in rental revenue as a result of amortization of below market rents, increase in interest expense as a result of amortization of the discount from the fair value adjustment on the assumed loan, amortization of deferred loan costs, depreciation, amortization and investment management fee for the six months ended June 30, 2008 as if the property was acquired on January 1, 2008.
Net loss attributable to non-controlling operating units reflects an adjustment for the allocable portion of the pro forma loss of the Enclave property.
(K) Reflects the pro forma adjustment for Albion Mills in order to present the operations as if the property was acquired on January 1, 2008. The Company acquired Albion Mills on July 11, 2008. The pro forma adjustment recognizes revenues and operating expenses, interest expense, depreciation and amortization expense and investment management fee through July 10, 2008 (date prior to acquisition).
Net (income) attributable to non-controlling operating units reflects an adjustment for the allocable portion of the pro forma income of the Albion Mills property.
(L) Reflects the pro forma adjustments for Afton Ridge to record revenues and direct operating expenses for the period July 1, 2008 through September 17, 2008 (date prior to contribution in the joint venture). Rental revenues are recorded on a straight line basis by the unconsolidated joint venture. The pro forma adjustments also include investment management fees recorded by the Company and interest expense, depreciation and amortization expense as recorded by the unconsolidated joint venture as if the property was acquired on January 1, 2008.
Net (income) attributable to non-controlling operating units reflects an adjustment for the allocable portion of the pro forma equity in income of unconsolidated entities of the Afton Ridge property.
(M) Reflects the pro forma adjustments for the Maskew property to record revenues and direct operating expenses for the period October 1, 2008 through October 22, 2008 (date prior to acquisition) Rental revenues are
F-5
CB RICHARD ELLIS REALTY TRUST
Notes to Pro Forma Condensed Consolidated Financial Statements
(unaudited)
recorded on a straight line basis. The pro forma adjustments also include investment management fees recorded by the Company and depreciation and amortization expense as if the property was acquired on January 1, 2008.
Net (income) attributable to non-controlling operating units reflects an adjustment for the allocable portion of the pro forma income of the Maskew property.
(N) Reflects the pro forma adjustments for the Avion property to record revenues, direct operating expenses and interest expense for the period October 1, 2008 through November 17, 2008 (date prior to acquisition) Rental revenues are recorded on a straight line basis. The pro forma adjustments also include investment management fees recorded by the Company and depreciation and amortization expense as if the property was acquired on January 1, 2008.
Net loss attributable to non-controlling operating units reflects an adjustment for the allocable portion of the pro forma loss of the Avion property.
F-6
